State Retirement Plans

While many states have considered retirement plans for private-sector workers, not a single employer or worker has been enrolled in any of the five states that have actually proposed a plan.

The reason: States are leery of the costs, complexities and potential liabilities of making sweeping retirement promises to their citizens. California has been carefully studying these concerns for nearly three years, without resolution.

Risks remain if the new Labor Department guidance on establishing plans encourages more states to go down this path. Even the Labor Department cautions states that mandatory programs could be challenged in federal court.

If the goal is to get workers access to savings, there are already low-cost solutions available, including the Treasury Department’s “myRA” (“my Retirement Account”) program, which could be put in place right now. Why should workers and taxpayers wait for these risky state-run experiments?